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Airlines must compensate passengers on connecting flights who arrive at least three hours late at their final destination, the European Union’s highest court said in a ruling the industry said may backfire on travelers.

“The fact that the original flight was not delayed beyond the limits laid down by EU law does not affect the right to compensation,” the EU Court of Justice ruled today. The Luxembourg-based court’s ruling can’t be appealed.

Today’s case is the latest in a line of rulings clarifying the bloc’s law on compensation duties for airlines in cases triggered by passenger compensation requests. The EU court has ruled in previous cases involving Deutsche Lufthansa AG, EasyJet Plc and TUI Travel Plc that passengers who arrive “three hours or more after the scheduled arrival time” have a right to compensation, except in “extraordinary” circumstances, such as a strike or bad weather conditions.

The ruling is “a missed opportunity” to strike a balance between passenger compensation rights and the ability of small carriers to offer connecting flights across Europe, Chris Goater, a spokesman for the International Air Transport Association, said in a phone interview.

Smaller Airlines

Smaller regional airlines “cannot risk” becoming liable to pay compensation for delays on connecting flights and the ruling may see such airlines refusing to offer connections or insisting on longer connection times, Goater said.

An EU review of draft rules on passenger compensation should avoid “becoming a step too far” for the airline industry.

In today’s case, Luz-Tereza Folkerts is seeking compensation from Air France SA after arriving 11 hours late in Asuncion, Paraguay on a flight that took her from Bremen, Germany to Paris, France and from Paris to Rio de Janeiro.

Air France is appealing an earlier compensation order and the German tribunal handling the case asked the EU court whether the compensation duty still applied if the first leg of the flight was only delayed by 2.5 hours and as a result the passenger missed her connecting flight.

Today’s ruling is one of more than 30 cases at the court on passenger rights, Viktoria Vajnai, a spokeswoman for the Association of European Airlines, said in an e-mail.

“This is a clear evidence that the current regulation is not coherent, and it is substantiated by the patchwork of ECJ rulings,” Vajnai said. The European Commission is planning to review rules on passenger rights and airlines will contribute to legislators’ debate on the issue to represent airlines’ interests, she said.

Air France said it took note of the court ruling and declined to comment further, according to a company spokesman who asked not to be identified in line with the firm’s policy. Air France is the French airline unit of Air France-KLM Group.

With assistance from Aoife White in Brussels and Andrea Rothman in Toulouse.

Editors: Peter Chapman, Andrew Clapham. To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net. To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.